Kentucky... RED ALERT!... JP Morgan Takes Control Over ALL State Financial Services!... Worried? You Should Be!

One of the major players in the global financial crisis is now in charge
of all financial transactions in an entire state. Could this spread? ~ Danny Mayer

On July 1, JP Morgan Chase became the Commonwealth's bank. As the
state's official depository, JP now receives all deposits, writes all
checks and makes all wire transfers on the $12-15 billion that flow
through Kentucky state government in the course of a fiscal year.

It
will cut payroll checks, receive federal and other funds earmarked for
the state, and disburse educational or transportation or any other funds
to their appropriate monetary endpoints.

For its trouble, the bank will
receive $1.3 million in state fees and the ability to re-lend idle
state funds out to customers for private gain.

Yes, you should be worried!

* JP's decade...

A global corporation with more than $2 trillion in assets and
operations in 60 countries, JP Morgan Chase has been a major figure in
the ongoing global financial crisis.

As one of the largest private banks
in the U.S., the bank made incredible amounts of money by underwriting
many of the questionable loans (sub-prime, zero down, adjustable rate)
that fueled the American housing bubble.

It then made even more money by
packaging hundreds of these shitty loans into a single "product," a
mortgage backed security, which it sold like Twinkies to pious religious
non-profits, filthy-rich hedge fund managers, municipal fire-fighters,
retired auto-workers, and the like, each security effectively putting
these groups on the hook—and not JP—for the shitty loans that it had
helped create.

When, inevitably, individual homeowners began to default on their
loans, thereby triggering the stock market collapse of 2008, JP Morgan
found a way to make money on that, too, by buying insurance (known as
credit default swaps) on the shitty securities of shitty mortgages that
it had sold to unwitting investors.

For good measure, the U.S.
government handed the corporation $25 billion in TARP funds, $30 billion
in U.S. treasury backing to purchase bankrupt Bear Stearns (previously a
global leader in mortgage backed securities), and the biggest chunk of
the $129 billion of taxpayer-provided money earmarked for creditors of
bankrupt credit default swaps provider AIG.

Since 2002, the bank has turned its attention to another easy revenue
source: city, state and national government debt. Along with other
large banks like Goldman Sachs, it began selling a new type of
complicated loan to countries like Greece, states like Connecticut and
Mississippi, and cities as far-flung as Birmingham, Alabama, and Milan,
Italy. Even the Delaware Port Authority and the Pennsylvania school
system have gotten caught in the JP trap.

These derivative packages, named "swaps" to ensure they do not get
officially counted as debt on government balance sheets, essentially act
as second and third and fourth-mortgages on public infrastructure
projects like airports and highways. Loaded with adjustable rates and a
slew of fees and "trigger points" that ensure rapid debt growth, the
swaps essentially ensure the privatization of public government assets.

In the case of Birmingham, Alabama, for example, Rolling Stone
journalist Matt Taibbi has reported how a city sewer project initially
estimated to cost $250 million generated "a total of $1.28 billion just
in interest and fees on the debt," most of which went into the private
coffers of J.P. Morgan.

The result for Birmingham? "Between 2008 and
2009," Taibbi notes, "the annual payment on Jefferson County's debt
jumped from $53 million to a whopping $636 million." The debt now stands
at $4800 per resident.

This is the corporation that our state leaders have chosen to safeguard and disperse public state money.

* Local first...

In the most recent of a slew of fraud-related lawsuits targeting JP
Morgan's financial transactions, the corporate giant has been forced to
pay $228 million in damages for rigging bids on municipal bonds—public
debt incurred to pay for expensive infrastructure projects.

The lawsuit
accused JP Morgan of insider dealings that inflated the taxpayer cost on
over 90 projects spanning 31 states. As is standard in these cases, the
money the bank was forced to pay back reflected only a percentage of
what they made off the deals, quarters on the dollar.

What's more,
because the settlement did not require the bank to admit guilt, it has
been effectively insulated from any future litigation on behalf of the
specific localities that were defrauded.

One of these states, it should be known, is Kentucky. A small blurb
appearing in the July 13 Herald-Leader, less than 2 weeks after state
leaders made JP Morgan Chase our Commonwealth bank, cited two separate
bid-rigging schemes that had made their way onto the 31-state lawsuit:
Western Kentucky's Henderson County received $224,000 from the lawsuit,
while the University of Kentucky stood to recoup $66,000 as part of the
settlement.

"The issue with UK," the Herald-Leader blurb reported, "involved a
series of bonds totaling $18.695 million dating to May 2001" for the
Peter H. Bosomworth Health Sciences Research Building (described by UK
as "the Medical Center's marquee research facility") and its utility
infrastructure.

Writing in response to the JP lawsuit on his Rolling Stone blog,
Taibbi lamented that big banks were getting away with crimes that, when
pulled off by blue-collar muscle outfits like the mob (and they are),
result in lengthy jail sentences. Fraud on the part of JP Morgan and
other corporate banks, he concluded, is "not going to stop until people
start doing hard time for these crimes."

Unfolding events here in this state attest to how far we still have
to come. Not only does JP Morgan mostly escape prosecution, here in
Kentucky we seem hellbent on giving them the keys to our kingdom's
vault, too.

Danny Mayer - Writer for North of Center a free bi-weekly paper located in coal-loving
Lexington, KY. We cover sports, politics, music, film, and any other
things that flow through the inner-Bluegrass region. If you're
interested, we've now got a website: noclexington.com

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